Suze: February 16, 2025. Welcome everybody to the Women and Money podcast,
Suze: as well as everybody smart enough to listen. I hope
Suze: you had a good Valentine's Day. Did you?
Suze: I did, but we'll have to wait until Thursday when Ms.
Suze: Travis can tell you all about it. But for now,
Suze: I think you all should get out your little Suze notebooks,
Suze: and today's Suze School is going to be very, very different.
Suze: Because today Suze School, we're gonna have a guest. It's
Suze: not gonna be just me. I'm gonna pretend like I'm
Suze: KT and I'm going to be asking the true expert
Suze: when it comes to certain things about value cost averaging
Suze: dollar cost averaging, and oh, all kinds of other things
Suze: that you wrote in and asked about before I introduce
Suze: the most extraordinary and amazing.
Suze: You have to wait till I say his name, but anyway,
Suze: last Sunday I did an episode on value cost averaging.
Suze: On the Women and Money Community app, I put up
Suze: an example of how it works. Boom, there goes my
Suze: email and I'm in the Women and Money community app,
Suze: and you had question after question and I'll be honest
Suze: with you,
Suze: I'm not good enough at that because it isn't my concept. Remember,
Suze: I was taught it by somebody, our guest, and I decided,
Suze: you know what, all of you always deserve the best.
Suze: You deserve the most knowledgeable in certain areas, in fact,
Suze: in all areas and in this particular area that we're
Suze: about to talk about today, which isn't just about value
Suze: cost averaging, but it's about the markets overall, it's about
Suze: individual stocks. It's how to make your money, make more
Suze: money when it comes to investing.
Suze: There's, in my opinion, the one and only Keith Fitz-Gerald,
Suze: and he is with us right now. Good morning, boyfriend.
Keith: Well, hello there. Thank you so much for having me.
Keith: I've been looking forward to this all week and thanks
Keith: to everybody listening for spending a few minutes of your
Keith: time with us today. This could be great.
Suze: This is great and you know so many people, Keith
Suze: wrote in and they said, we wish this could be
Suze: on video. We want to see both
Suze: of you and then they would write in and they said,
Suze: Why don't the two of you always do a podcast together?
Suze: Oh my goodness. All right, so maybe we'll have to
Suze: do that.
Keith: Let's think about it. That would be so much fun,
Keith: wouldn't it? All right.
Suze: So everybody, if you don't know about value cost averaging,
Suze: then you need to go back to last Sunday's podcast
Suze: and listen to it. You just do. But so many
Suze: of you have already listened to that podcast.
Suze: Therefore, I'm gonna ask you, Keith, some of the questions
Suze: that were on the wall and people wrote in. They
Suze: want to know about it, but then we're gonna switch
Suze: because people are also writing in and going, Keith, I
Suze: bought Palantir at 20. Should I buy it more now?
Suze: I mean, we have questions all over, but then I
Suze: also want to give you a little time
Suze: for you to tell everybody what you want to tell them,
Suze: they're also asking about is a program going to come out?
Suze: Is it not gonna come out? So let's answer all
Suze: their questions today. Outstanding. And let's hopefully make them happy.
Suze: Now I'm going to start off easy here for you. OK.
Suze: All right. The first question, which I find fascinating is
Suze: kind of generic.
Suze: Doesn't everything depend on the day that you invest your
Suze: money and where the stock is on that particular day?
Keith: That is a very interesting question with a very simple answer,
Keith: and it's no. And here's why the actual day you
Keith: buy or the time of day you buy or the
Keith: method by which you buy doesn't matter. The key with
Keith: something like value cost averaging or even dollar cost averaging
Keith: is to do it consistently. So if you look at
Keith: the data, and this is what we do for a living,
Keith: and we look at all this data, if you look
Keith: at all the data for hundreds of years.
Keith: If you're consistent, you are getting around market timing risk.
Keith: You are harnessing volatility that others fear, so it doesn't
Keith: matter whether you pick your birthday, whether you do it
Keith: on Christmas, whether you pick another holiday, whether you do
Keith: it even every Monday morning as long as you do
Keith: it
Keith: consistently.
Suze: Great, there's one next.
Suze: Looking forward to hearing from both of you together. Yeah, baby,
Suze: here we are together. I know. Is there a more
Suze: and you kind of just answered this, but I'm gonna
Suze: keep drilling this in because I'm telling you people blew
Suze: their minds with the details and really the minutia and
Suze: it's really a little bit ridiculous. I have to tell you.
Suze: Because they think you have to stick to a certain formula.
Suze: You can't, it's like they've put themselves into this little
Suze: box that they're afraid to come out of now. So ready,
Suze: looking forward to hearing from both of you together. I
Suze: don't blame you. Is there a more ideal time of
Suze: day to invest the market open?
Suze: The close and for VCA does it matter what time
Suze: of month? Also, what about dividing funds for weekly or
Suze: biweekly or stick to monthly? See how what they've done here?
Suze: Oh sure, sure. So it's like they're thinking that.
Suze: Everything has to be a certain way. Like when I
Suze: gave the example last Sunday of $12,000 and $1000 a month,
Suze: they literally took it that they needed $12,000 and they
Suze: had to put in $1000 a month. So first of all, everybody,
Suze: that was just an example last week.
Suze: It's just an example. So you could do it with
Suze: any amount, but that's the question. What's your answer?
Keith: Well, there's two elements at work here, right? And they're
Keith: both counterintuitive, and, and there's also some fun to this
Keith: because like anything in the stock market, there's there's always
Keith: rhyme or reason or some history. So when I started
Keith: my career 45 years ago, I mean, I've been doing
Keith: this for a long, long time.
Keith: There used to be very definitely a time of day
Keith: where you could swoop in and and have an advantage.
Keith: And funny enough, that was roughly 10:35 in the morning
Keith: and roughly 2:38 in the afternoon. And the reason why
Keith: had nothing to do with the stock exchange.
Keith: In the morning, the donut truck would show up and
Keith: everybody run off the floor to go get donuts. In
Keith: the afternoon, the hot dog truck would show up and
Keith: everybody run off the floor to get hot dogs. So
Keith: if you were trading or you're looking for just a
Keith: little bit of an edge, you knew that there was
Keith: going to be a lull in activity and frequently you
Keith: could get a better price either buying or selling. So,
Keith: you know, that used to be true, but now what's
Keith: happened is we have this tremendous shift to computerization.
Keith: And so most if you go to the New York
Keith: Stock Exchange today, it's a very quiet place and people
Keith: are walking around with iPads and there's very little open
Keith: pit trading left in Chicago anymore. In fact, you go
Keith: to the Hong Kong Exchange, which is one of the
Keith: busiest in the world, and it's dead silent. So this
Keith: idea that is there a better time to buy or
Keith: a worse time to buy really is moot now because
Keith: the computers have eliminated all of that. But if you
Keith: really want to try.
Keith: What we're seeing lately is that the first 30 minutes
Keith: and the last 30 minutes are interesting because there's additional
Keith: volatility and interesting can be good or bad. It just
Keith: depends on how you approach it. So, so I would
Keith: get that out of your head. The big key is
Keith: consistency number one. The other thing is you're falling if
Keith: you're thinking that way, there's nothing wrong with that. That's natural, right?
Keith: A lot of people do that, but you're falling right
Keith: into Wall Street's trap, OK? Wall Street wants you
Keith: to think in smaller and smaller and smaller and smaller
Keith: details because that's how you're easier to separate from your money.
Keith: If you're constantly off balance, if you're focused on the minutiae,
Keith: you're gonna get squeezed every time. The counterintuitive thing to
Keith: do is to take a deep breath, take a step
Keith: back and understand that investing as much as they want
Keith: you to think it's a game of precision.
Keith: Is a game of being close enough. You find great stocks,
Keith: you invest in them consistently, you hold for as long
Keith: as you can, you leave your money alone for as
Keith: long as you can. That really is the key in
Keith: today's markets. It's counterintuitive, so it's, I would encourage everybody listening. A,
Keith: that's normal what you're feeling, but B, take a deep breath,
Keith: step back, that's the real key to success.
Suze: And the thing is, is that, does it matter if
Suze: it's weekly, biweekly, or should they stick to monthly?
Keith: OK, that's another wrinkle. Now that's really my encouragement is
Keith: once a month is probably just fine for most investors.
Keith: And and the reason is that if you start going
Keith: down into weekly or biweekly, suddenly you're getting into market timing,
Keith: you're getting into, you know, the world of very sophisticated
Keith: traders who are out to separate you from your money
Keith: and you don't want to play that game. The way
Keith: to beat Wall Street is not to engage in fights
Keith: you can't win and not to pick battles that they
Keith: have an interest in fighting.
Keith: And so again, counterintuitively, if you're investing consistently and you're
Keith: doing it once a month, you are far more likely
Keith: to make money over time than you are to lose it.
Keith: You are also far more likely to harness the volatility
Keith: they want you to fear.
Keith: And finally, you are far more likely to sleep better
Keith: at night, and I like that
Keith: part.
Suze: Yeah, but you see what I mean, how they're like
Suze: getting into the how often whatever this next one is
Suze: kind of about the what ifs. Do you have to
Suze: then assign how much money you're allocating to each share
Suze: in your portfolio at the beginning of the year?
Suze: So people are confused about, well, I gave an example.
Suze: You have $12,000 to invest, and again they freaked out.
Suze: So the question is, here we are, maybe it's March,
Suze: maybe it's April. How do you start doing this and
Suze: how do you know how much to allocate to do
Suze: this with?
Keith: Well, again, this is like cooking a great recipe, right?
Keith: You wanna know what ingredients you need before you get
Keith: started because the last thing you want to do is
Keith: if you're making great cookies, find out you're short of
Keith: flour or maybe you're missing the chocolate chips you were
Keith: counting on or something like that, right? My suggestion again is,
Keith: is you want to think in as long a time
Keith: frame as possible, 12 months a year, most of us
Keith: can handle. Most of us can say, oh, you know, where,
Keith: where am I gonna be 12 months from now? We
Keith: actually call this the painted picture.
Keith: And what we do is we test it out at
Keith: the beginning of the year and we paint a picture.
Keith: Where do I want to be in the year? What
Keith: does my cash flow look like? What, what reasonably am
Keith: I gonna have to invest? And that depends on your job,
Keith: that depends on your family support. Do you have an
Keith: emergency fund built up, all the things you constantly encourage
Keith: your listeners to listen to and focus on and do.
Keith: And once you got those decisions out of the way,
Keith: it's simply, OK, how much can I realistically invest per month?
Keith: What do I want my account to grow?
Keith: And all you gotta be is close enough. You don't
Keith: have to be to the penny and, and if your
Keith: circumstances change during the year, then guess what? You can
Keith: change your thinking too. The math still works. So you know, I,
Keith: I liken this to holding my thumb up and looking
Keith: at the horizon and if I can see the horizon
Keith: around my thumb.
Keith: That's about right.
Suze: So it's not like you have to have a specific
Suze: amount of money like $12,000 that you divide by 12,
Suze: so you have to invest $1000 a month, whether it's
Suze: dollar cost averaging or value cost averaging.
Suze: You can change as time goes on, correct?
Keith: Absolutely, and that's a vitally important concept to think about and,
Keith: you know, I, I, I talk like you to tens
Keith: of thousands of investors a year around the world, and
Keith: one of the mistakes that everybody makes is they box
Keith: themselves in.
Keith: And in today's world, you can't do that. Today's world
Keith: is constantly fluid, it's very dynamic. We live at one
Keith: of the most exciting times in human history, which means
Keith: that being flexible is exactly what you want to do
Keith: because if you're being rigid and uncertain.
Keith: And if you're being living in fear as opposed to
Keith: investing in optimism, you've already doomed yourself to to bad performance.
Keith: What you want is to build your wealth and your
Keith: confidence and your knowledge as the markets do that.
Suze: Where everybody seems to be confused because of the example
Suze: that I gave.
Keith: Welcome
Keith: to my world,
Suze: right? Which
Suze: is with value cost averaging you look at the value
Suze: that you intended to have as you know, every single
Suze: month and you invest according to that depending on the
Suze: stock price. Again, for those of you who don't know
Suze: what I'm talking about, listen to last Sunday's podcast or
Suze: look at the example on the Women and Money community app.
Suze: So this now.
Suze: Is using that example of $1000 a month, $12,000 at
Suze: the end of the year for your target value. Here
Suze: is the question.
Suze: I'm getting a little confused around month 6 because everybody
Suze: obviously in month 6, your target value at $1000 a
Suze: month would be $6000 for that month. All right.
Suze: I thought the target portfolio amount for month 6 would
Suze: be $6000 which I think is the actual portfolio value.
Suze: If the stock is at $120 a share, which we
Suze: said it had gone back up to.
Suze: Then that means that it's already at $6000 and we
Suze: don't need to add any more money for that month.
Suze: So what do we do?
Keith: OK, so let's take the the model and the example
Keith: out of the equation for it. Let's imagine we're going
Keith: to the grocery store, and let's imagine we've got lately
Keith: $100 for eggs, but I mean, you know, let's let's
Keith: just imagine we've got $20 and we want to buy
Keith: some eggs, right?
Keith: If we see the price of eggs go on sale
Keith: and we know we're gonna need them, it's very likely
Keith: you're gonna buy something that's on sale, right? You're gonna
Keith: take that extra amount of money and you're gonna buy
Keith: a few extra eggs because odds are good that the
Keith: price of those eggs is gonna go higher next week.
Keith: That is value cost averaging in a nutshell. If you
Keith: have a sale in front of you, you spend a
Keith: little bit extra money to buy whatever stock it is
Keith: you want to get your hands on. If the price
Keith: of eggs goes higher and you've already got your eggs
Keith: on the shelf, guess what? You don't need to buy them.
Keith: The value of your eggs is already there. You've got
Keith: them on your shelf, they're already in your pantry. Value
Keith: cost averaging with stocks is the same way. If you
Keith: have a sale, if the markets come down on you,
Keith: if the price of that stock drops.
Keith: What you want to do is think about your target
Keith: in terms of, OK, my portfolio is worth $100 next
Keith: month I want it worth $110 so I'm gonna add
Keith: a little extra money to bring the value of my
Keith: portfolio to 110 regardless of what the stock has done.
Keith: So you buy a few extra shares and the advantage
Keith: to doing that, Suze, is that you buy low, you
Keith: sell high over time.
Keith: That dramatically accelerates your profit potential, particularly if you're working
Keith: with dividend stocks and you're leaving your money alone for
Keith: a long time. You will come roaring out of the
Keith: basement and turn around 4 or 5 years from now
Keith: and go, wow, I had no idea because suddenly you've
Keith: bought lower and sold higher.
Suze: The main difference that I think I have right, you'll
Suze: have to tell me, but that most people aren't quite
Suze: grasping is that dollar cost averaging was very simple for them.
Suze: They picked a specific amount of money and they pushed
Suze: automatic and every month that amount of money was taken
Suze: out of their money market accounts to buy stock. What
Suze: they're missing, however, is with value cost averaging, even though
Suze: in both cases as the stock goes down you're buying more.
Suze: And obviously as the stock goes up, you're buying less,
Suze: but with value cost averaging, you're getting a little bit more.
Suze: Than with dollar cost averaging because you're not sticking to
Suze: the same dollar amount every month.
Keith: Bingo.
Suze: Say that again.
Keith: Bingo.
Suze: Say it again...
Keith: Bingo bingo bingo bingo bingo bingo bingo bingo bingo.
Suze: And that's what they're missing. You want to get more
Suze: value for your money, everybody. You don't want to go
Suze: on automatic and just oh,
Suze: I'm going to invest $1000 a month or $100 a month.
Suze: When if you just invested $120 a month, you would
Suze: be getting a few more, even if it's a half
Suze: a fraction of a share more, that half a fraction
Suze: of a share more will make you a whole lot
Suze: more money in the long run, and that is what
Suze: they are missing.
Suze: Right, so again, just to repeat like another question, maybe
Suze: I missed something. What if month 4, the value is
Suze: at $4000 and you don't buy any more shares. So
Suze: in fact you might not actually invest the whole $12,000
Suze: in one year because the account value has increased. They forget,
Suze: well, you tell them what they forget, what they could
Suze: do with that money.
Keith: Well, you forget two things, right, because if you've got
Keith: a stockpile of cash and it's sitting on your pantry
Keith: shelf and the eggs go on sale, number one, you've
Keith: got the flexibility to go ahead and buy them if
Keith: you want, but number two, if you're used to dollar
Keith: cost averaging and you're disciplined and you already got that
Keith: under control, here's where this gets really cool and really interesting.
Keith: Because if you're used to putting in $500 a month
Keith: and you're already mentally disciplined, you're paying yourself, you're doing
Keith: all the things Suze encourages you to do constantly, then
Keith: go ahead and do it anyway. But put it in
Keith: a short term Treasury fund. Now all of a sudden
Keith: you're earning 4%, 3%, 5%. Your cash is stockpiled. It's
Keith: not sitting there. You're not tempted to spend it because
Keith: you've already paid yourself, you've already invested.
Keith: And then when you get the chance and the market
Keith: will inevitably hand you several chances during the year to
Keith: do
Keith: this.
Suze: Or you could take that extra money that you're not
Suze: investing in stock A and possibly start to do the
Suze: same thing with stock B or another ETF. So there's
Suze: you don't have to just stick with one stock and
Suze: just go, oh, now what do I do? Do you?
Suze: Are you starting to get this, everybody?
Suze: You've put yourself into a box, and the last thing
Suze: both Keith and I want you to do when it
Suze: comes to investing is limit yourself. Investing is about expansion.
Suze: The investing is about understanding your own emotions and really
Suze: keeping them at bay and thinking, oh, I've done something wrong,
Suze: I da da da, no.
Suze: Just keep listening and you'll get it. Last one on this,
Suze: which is maybe I'm not completely understanding it, but it
Suze: seems that in this example.
Suze: Why did I give this example anyway of having $12,000
Suze: to invest that if the stock price is decreasing for
Suze: several months or there is a steep drop, would you
Suze: deplete your $12,000 before month 12?
Keith: OK, that is A, a very smart question, B, a
Keith: very logical question, and C, I love it because it
Keith: means you're thinking ahead. You're really beginning to understand how
Keith: this works. The markets go through protracted downturns.
Keith: But here's the thing, and this is where you've got
Keith: to really again I've been doing this a long time.
Keith: One of the hardest lessons for me to learn as
Keith: I came up through the ranks is you've got to
Keith: learn to trust the numbers. You've got to learn to
Keith: trust human psychology and let me give you a data
Keith: point that will really drive this home is the markets
Keith: since 1871 have a very defined upward bias. If you
Keith: look at other markets for even far more ancient periods
Keith: in history, they all have an upside bias.
Keith: But our stock markets today since 1871, have spent 83%
Keith: to 85% of the time at or within 10% of
Keith: new all-time highs.
Keith: Meaning that there are a lot more bulls than bears
Keith: over time and if you buy the right companies, if
Keith: you're DCA or VCA into the right companies, you are
Keith: automatically putting the odds in your favor. That's roughly if
Keith: we look at it again since 1871, there's 1300 new highs.
Keith: That's roughly one new all-time high a month for a
Keith: long period of time, so...
Keith: The idea that you're playing not to lose is where
Keith: everybody's mindset is.
Keith: But where your mindset should be is playing to win.
Keith: And and that's a very different mental calculus. And again,
Keith: if you're thinking I'm playing not to lose, there's nothing
Keith: wrong with that, that worked for a long time, diversification
Keith: worked for a long time, but you're falling into Wall
Keith: Street's trap.
Keith: What you want to think about is flipping that around,
Keith: playing to win, playing to get those great companies, playing
Keith: to build your wealth. This is not a competition, it's
Keith: about what you want to achieve with your life and
Keith: your world and your money.
Keith: Because if you work hard for your money, there's gonna
Keith: come a day where your money works hard for you
Keith: and that's what VCA is all about. It's, it's like taking,
Keith: you know, buying holds good DCA is better, but VCA
Keith: really now you're cooking with some hot sauce. It gives
Keith: you the opportunity for bigger returns, less risk, and discipline.
Suze: So to answer his question though, the chances of him
Suze: being told
Keith: I forgot about that part.
Keith: I got so excited. I forgot about that part. I mean,
Keith: I love what I do. Yes, to answer your question,
Keith: that is absolutely possible in a protracted downturn. However, we've
Keith: done a lot of research in this area.
Keith: That's not a bad thing either, because what it means
Keith: is you have now invested deeply, you've invested at a
Keith: substantial discount and you've built up a substantial reserve for
Keith: when the markets come roaring back, and they
Keith: will.
Suze: Because remember everybody, these markets aren't going to tank overnight
Suze: 50 or 100%, and if you keep being diligent, you're investing,
Suze: you're investing, and you're investing, and now you're out of
Suze: your $12,000 it's all spent, but you haven't lost the money,
Suze: it's invested in a stock that you wanted to buy.
Suze: That was a good quality stock, and the reason that
Suze: it went down isn't cause the stock itself was bad.
Suze: It's that all the boats were sinking cause the water
Suze: went down when it turns around and a great example
Suze: of this was 2009.
Suze: You know, when the Standard and Poor's 500 index, I think,
Suze: was at 600, and all these stocks were at nothing.
Suze: They had all gone down incredibly and if you just
Suze: kept them and now you have a whole lot of
Suze: shares because they got so cheap as you were buying them,
Suze: oh my God, you made a fortune over the next years,
Suze: so you're not out of money.
Suze: You've invested all the money that you designated towards that stock,
Suze: and once that amount of money is designated, you bought
Suze: all the shares you can with it.
Keith: Good.
Suze: Now you just told
Suze: them.
Keith: And, and the really cool thing about that, right, and again,
Keith: you know, learning this as a professional trader is a
Keith: professional investor.
Keith: That's a great problem to have because of the dramatically
Keith: increased profit potential when the markets come roaring back. So it's,
Keith: it's maybe you think, oh this is, this is a
Keith: bad amount of cash. I can't buy more. That's the
Keith: real problem is you can't buy more, but you've already
Keith: locked in your future returns. So I mean how cool
Keith: a trade-off is that? And, and you know again it's,
Keith: it's counterintuitive.
Keith: It doesn't make a lot of sense at first, but
Keith: when you really think about buying at a discount and
Keith: you think about buying these great companies, I mean this
Keith: is like buying Apple at $10 a year or being
Keith: able to buy Palantir at 6 when it dropped. I
Keith: mean think about that, right? I did. Exactly, me too.
Keith: I mean, I bought more, you know, I mean people,
Keith: people are like, oh my God, but it could go down. Yes,
Keith: it could, but when it comes roaring back, imagine how
Keith: much bigger your profit potential has become.
Keith: That's how a winner thinks. So we get rid of
Keith: that fear. I mean, that's normal, that's, you know, you're
Keith: not abnormal if you're feeling that, but do make an
Keith: effort to take those emotions out of the equation because
Keith: you are listening to Suze, you are playing to win.
Suze: And they're also, if they're smart, they're listening to you.
Keith: You're
Suze: very
Keith: kind.
Suze: So one last about this, then we'll quickly go to
Suze: Palantir and other things, but
Suze: all these people did this Monte Carlos. They, I mean,
Suze: some of these people went to the 10th degree to
Suze: figure out what's better, dollar cost averaging or value cost averaging,
Suze: and they want to know as if it makes really
Suze: a tremendous difference. So just briefly, can you answer that
Suze: for these
Suze: people?
Keith: Absolutely. So I was king of the nerd herd growing up.
Keith: I had my propeller beanie and everything.
Keith: And you know my background is in nonlinear data science,
Keith: so this is a question that we have spent tens
Keith: of thousands of hours of computing time on. Uh, yes,
Keith: we've run those same Monte Carlo simulations we have run
Keith: all of the randommizers you can think we've done walk
Keith: forward testing we've run back testing we've done testing on
Keith: the testing.
Keith: And what we have learned is that there is absolutely
Keith: no question that value cost average is the best way
Keith: to go. Where it breaks down is when people start
Keith: trying to second guess it. Oh, I've got to do
Keith: it on this date. I've got to do it on
Keith: this time. I've got to, I'm gonna be out of cash.
Keith: Oh my gosh, it's falling too long. Those are questions
Keith: that are put on by human limitations, not quantitative limitations
Keith: as part of the modeling.
Keith: And so we've run it with small data sets, we've
Keith: run it with millions and billions of data points in
Keith: in the sets in every single time under a wide
Keith: range of conditions, both hypothetical and real.
Keith: VCA wins.
Suze: Yeah, so for those of you who wrote into me,
Suze: and I appreciate it, and you present like I ran
Suze: this Monte Carlo, which is, it's uh it's a program
Suze: that I don't know. I've yet to really think that
Suze: it comes out with the best answers for all of you,
Suze: but that's besides the point.
Keith: Well, let me, let me, let me, let me spoke about
Keith: that there is, there's an interesting thing, right? So the
Keith: Monte Carlo simulation is a quantitative exercise that supposedly introduces randomizing,
Keith: you know, variables to the test set and
Keith: there's a huge proposition in the market that Burton Michael
Keith: wrote this thing, a random walk down Wall Street and
Keith: the markets are random, nobody can predict it. Well, I believe,
Keith: you know, people who are a lot smarter than I am,
Keith: believe that's not true.
Keith: The markets are not random. There are very predictable elements
Keith: to them, and that is exactly why VCA works in
Keith: today's markets is because what we're doing is we're not
Keith: working on the random price nature of the markets. We're
Keith: not working on the random stocks. We're very deliberate about
Keith: which stocks are we picking, how are we using it,
Keith: what are the tactics we're picking.
Keith: So we're automatically stacking the odds in our favor to
Keith: nth degree. I mean, now, obviously, you know, the world
Keith: could be a very quiet place for a few 1000
Keith: years if things get out of control geopolitically, but the
Keith: markets are not going to be our worry if that happens, right?
Keith: So take that out. It's more important to reinvest as
Keith: if the sun's coming up tomorrow. And what we know
Keith: from the Monte Carlo simulations and all the other simulations
Keith: we do is if VCA wins.
Suze: But you know it's so funny.
Suze: These people right and they're so proud at the research
Suze: and the things that they've done. I just want to
Suze: say something to all of you. I'm thrilled that you're
Suze: doing that.
Suze: And you come up with your own conclusion based on
Suze: maybe one study or whatever. I'm asking you all now
Suze: to listen to Keith. For 40 years he has been
Suze: doing this. When he says he's a propeller head and
Suze: a nerd. Oh, he is. Half the time he's talking
Suze: about things and I'm like, What the hell did you
Suze: just say? But you can run your own if you want.
Suze: Or you could take 40 years of experience and millions
Suze: of dollars of research.
Suze: Computerization that none of you have the ability to do
Suze: truthfully and listen to what he just said. He has
Suze: nothing to gain other than to help you help yourself.
Suze: We're switching now. We'll run this podcast a little bit
Suze: longer than normal because we have the master here and
Suze: I just want to answer the main things you want
Suze: to know, which is ready for this drum roll.
Keith: (Keith makes a drum roll sound)
Suze: There we go. Is it too late to buy Palantir?
Keith: No
Keith: way.
Suze: I thought you were gonna say no way, but anyway,
Suze: if he were just talking to me alone, everybody, he
Suze: would have used the word. But since we're on a podcast,
Suze: he's trying to show you he's a dignified man, which
Suze: he is. You're very good. Anyway, go on, go on.
Keith: So, so here's, here's how you break it down, right? And, and,
Keith: and again, there are a couple different elements that intersect here,
Keith: which is why people are asking this question, right?
Keith: Number one, oh my God, is it too late? Well,
Keith: think about that. If it's a great party and you
Keith: know it's gonna go on for a long time, are
Keith: you too late to get there at 8 o'clock as
Keith: opposed to 7 o'clock? No way. You're gonna walk through
Keith: the door and have a great time, right? Now you're
Keith: gonna have to look a little harder because maybe the
Keith: room's gonna be a little crowded before you get to
Keith: the bar, the cocktail tray or the hors d'oeuvres, whatever.
Keith: Same situation here Palantir is still a phenomenal stock. It
Keith: is still.
Keith: Early days we are still ahead of one of the
Keith: greatest single trends in recorded human history and that's how
Keith: we use AI and big data. There is nobody else
Keith: who does what they do. The numbers are all going
Keith: in the right direction. The CEO is unapologetically in support
Keith: of his shareholders. He could give a, you know what
Keith: about Wall Street, which is really attractive from an investing standpoint,
Keith: but then at the bottom line.
Keith: The way you control this is to use a tactic
Keith: like VCA because behind the scenes professional traders have, believe
Keith: it or not, they have largely missed the boat. They
Keith: couldn't check their boxes they couldn't see Palantir in their spreadsheets.
Keith: I can't tell you how many thousands of traders, professionals
Keith: I've heard from, seen, watched, who missed this boat. So
Keith: now they know they've missed it.
Keith: So their goal is going to be to introduce volatility,
Keith: scare you out of your shares at a lower price
Keith: so they can buy it and use VCA or some
Keith: variant of it that we've been talking about so that
Keith: they can get their hands on the run higher. I
Keith: think we're looking at $200 a share. I was a
Keith: lone wolf in the woods when I said that initially.
Keith: I mean, we took out every price target 50, 70, 80, 100.
Keith: I think we're $200 within 36 months, probably quite a
Keith: bit sooner than that.
Suze: So another question is how do I know if I'm
Suze: investing too much in Palantir? I don't know. I think
Suze: you can't invest enough in it, but that's just my opinion.
Suze: Go on.
Keith: Well, that is a very simple answer too, believe it
Keith: or not, again, it has nothing to do with numbers.
Keith: Are you sleeping at night? I mean, are you worried
Keith: about it because if you're asking that question, my answer
Keith: would be, and having worked with thousands of investors around
Keith: the world for decades, is if you're asking that question
Keith: or you're losing sleep at night, you've got too much
Keith: risk on the table. So dial it back.
Suze: The next one is that if Palantir has doubled on you,
Suze: and the truth is many of these people bought it
Suze: at 20.
Keith: How cool is
Keith: that?
Suze: Right? And now here we are almost 100 points higher,
Suze: and now they're afraid.
Suze: So should they be selling? Should they, they're just freaks.
Suze: Should they do free trades? Any advice to them?
Keith: Well, I just wrote about this the other day to
Keith: our clients, uh, you know, professional and otherwise, and said, OK,
Keith: there's something you want a professional has a big gain
Keith: on the table like that, uh, there's something called selling
Keith: into strength.
Keith: And you want to sell because you have the opportunity
Keith: and you can, not because you must. And the reason
Keith: most investors feel the fear that that people are voicing
Keith: is because they're holding on too tight.
Keith: They can't let the stock fly like they want it
Keith: to because they're worried about it, they're scared about it.
Keith: They're they've let their emotions cloud their judgment.
Keith: So here's my answer, and it's twofold. Um, number one,
Keith: if you want to take a little bit of money
Keith: off the table and get to the point where you're
Keith: sleeping at night and you're not worried about it, I
Keith: would submit that's probably a pretty smart thing to do.
Keith: On the other hand, if you don't need your money
Keith: for 5 or 10 years and you can stomach the
Keith: volatility and you make peace with the headlines, and you
Keith: understand what I'm telling you about Wall Street wanting to
Keith: take your money.
Keith: Then you know what? You just hold your nose, let
Keith: it ride, put a big smile on your face, Cheshire
Keith: grin like I have, and you let it run because
Keith: stocks like this are gonna run again. I've, I've done
Keith: this a long time. I've learned every lesson I talk
Keith: about the hard way, right? And, and if you hold
Keith: on too tight, guess what? Sooner or later you're gonna
Keith: fall off the rope. If you hold on too loose,
Keith: maybe you can't grab the rope. So, so it's not
Keith: a competition, it's what's right for you out there, everybody listening.
Keith: Get comfortable with it. Get mentally comfortable with it. If
Keith: you're not, then sell a little bit. Get to the
Keith: point where you are and use tactics like DCA and
Keith: VCA to start re accumulating positions because that's how you
Keith: control risk and maximize profit potential.
Suze: However, one of your OBAers, One Bar Ahead, which is
Suze: a service that Keith has, that all of you are
Suze: more than welcome if you want serious education, everything to join. However,
Suze: wrote me and said, Suze, since he's going to be on.
Suze: He wrote and said, if you have it, you might
Suze: want to sell 25% and actually maybe even do a
Suze: strategy in case it goes down. Is he expecting it
Suze: to go down?
Keith: No, that's not quite a correct assessment. It was 10%
Keith: of the value, uh, but then on top of that, no,
Keith: I'm not expecting it to go down at all. That
Keith: had nothing to do with expecting it to go down
Keith: that had everything to do with reducing risk, which is
Keith: inherent in the DCA tactic, you know, it's like going
Keith: to Vegas gambling theory and investing theory is very similar
Keith: in this regard. The longer you leave your money on
Keith: the table or in a stock you own, the higher
Keith: the risk there is.
Keith: So what you wanna do is again, uh this is
Keith: a professional grade tactic as you start to accumulate position,
Keith: everybody's going yeehaw wha you know they're going off to
Keith: the rodeo.
Keith: But they also forget they could get bucked off. And
Keith: so what you want to do is you want to
Keith: just like step back for a little bit, take a
Keith: little money off the table, harness it, you know, I
Keith: mean that's we sell 10%, knock it back down a
Keith: little bit quantitatively and continue to accumulate the shares because
Keith: you never look a gift horse in the mouth. When
Keith: a stock really runs really quickly, this casino doesn't owe
Keith: you a 7% more than Palantir does.
Suze: One
Suze: more question before we go on to
Suze: the program or whatever it is that we're going to
Suze: create here for everybody, which is I'm waiting for you
Suze: to talk about topics relating to the risk of our
Suze: bank accounts, savings, and assets. How do we protect them now?
Suze: Everybody is scared to death.
Suze: With everything that's going on that they don't understand, they're
Suze: all afraid that their money's going to become worthless. Banks
Suze: are going to close. FDIC isn't going to be able
Suze: to pay for anything. The treasuries are going. I have
Suze: people writing me and said I cashed out of all
Suze: my treasuries because the treasury, so everybody is scared to death.
Suze: What would you tell them? OK,
Keith: number one.
Keith: You gotta take a deep breath. I mean you just
Keith: owe it to yourself to take a deep breath and
Keith: this is something we talk about all the time with
Keith: our clients around the world there is stuff you can
Keith: control and there is stuff you can't control. You can't
Keith: control what's gonna happen with the Treasury Department any more
Keith: than you can control the price of a green door
Keith: in mainland China. You just can't, but what you can
Keith: control is buying great companies, investing in amazing technology, stuff
Keith: that is going to build your future.
Keith: So, you know, again, to my comment earlier, you can
Keith: invest as if the sun's gonna come up tomorrow, which
Keith: is statistically the more viable thing to do and history
Keith: proves it beyond any shadow of a doubt, or you
Keith: can cower in fear.
Keith: And if you cower in fear, you have got to
Keith: come to terms with that you're gonna get left behind.
Keith: That's just as simple as that. And again, it doesn't
Keith: feel good, it's scary, it's uncertain, but here's the other
Keith: thing about that, right? I mean, I run into this
Keith: a lot, a matter of fact, I'm speaking in Vegas
Keith: next week. I know this question is going to come up,
Keith: but what about the Treasury? But what about the Fed? Well,
Keith: the numbers show that those things don't matter on anything
Keith: other than a short term basis. So again,
Keith: take a deep breath. Trust the numbers, look at your history.
Keith: The most dangerous words in the English language are, yeah,
Keith: but it'll be different this time. Odds are it will not.
Keith: In fact, odds are we're gonna find a way through this.
Keith: It may not be perfect, it may be kick the can,
Keith: but that's all the domain of clickbait artists, late night
Keith: email scammers, and foo-os, all of whom want to sell
Keith: you something or want your attention for whatever reason.
Keith: If you stay focused on the great companies, on the
Keith: great CEOs, on the big broad sweeping themes that are
Keith: improving humanity, improving our financial situation, and you're thinking like
Keith: a winner, suddenly you can invest in optimism, and that's
Keith: a whole different picture. You can look forward to the
Keith: sun coming up every single morning instead of worrying about
Keith: what happens when it sets.
Suze: That's my man. Now, the biggest question of all.
Keith: I didn't do it.
Suze: No, but I kind of did. Uh oh, right, and
Suze: it's this. When is the program coming out which does
Suze: this thing, and I've told everybody they had to be
Suze: patient number one because this was a project.
Suze: That was actually turned out to be far more complicated
Suze: than ever before because it wasn't just about Keith everybody
Suze: being able to do value cost averaging and everything on
Suze: a set number of stocks that he has followed without
Suze: having to determine money.
Suze: Into the equation it was just buy this, buy, sell that,
Suze: whatever it may be. This is where, and I told
Suze: you a little bit about how we wanted the program
Suze: to work. You would decide the amount of money you
Suze: want to invest and every month you would get an
Suze: email saying buy this many shares and it would all
Suze: be personalized for you.
Suze: That turned out to be a whole lot more difficult
Suze: because of the number of people that most likely will
Suze: sign up for this, which could be 100 or 200,000
Suze: people because of both of our audiences. So therefore I
Suze: then said, wait, wait, maybe we don't do that.
Suze: Maybe we create an exchange traded fund or really it's Keith.
Suze: You create an exchange traded fund. People just buy shares
Suze: in it and you get to do anything you want
Suze: with the stock within there. So I kind of screwed
Suze: it up as well and then Keith started to go, oh,
Suze: maybe we should go down that road. Maybe we should
Suze: call it this. I mean the two of us can
Suze: drive each other crazy.
Suze: But the two of us love each other so much,
Suze: but that's what happens when you put together two brainiacs
Suze: that really care about their customer. They care about every
Suze: single one of you and so what's the best way
Suze: combining both of our cares for you.
Suze: And doing it for sophisticated investors as well as investors
Suze: that ask some of the questions that you're asking me,
Suze: which are like, oh, you're just starting out, you're afraid
Suze: you're a woman who just lost her spouse and you're
Suze: 70 years of age, and you want to just do it.
Suze: So tell him what you're thinking now, Keith.
Keith: Absolutely. So yeah, I mean, Suze's absolutely right. When we
Keith: started this project, the, the markets were in sort of
Keith: one state of mind, and we started looking at the
Keith: complexities involved, you know, all of a sudden it went
Keith: from a few million calculations a day to literally billions
Keith: of calculations a day. The permutations involved with hundreds of
Keith: thousands of people tracking, you know, 30-40 stocks or whatever
Keith: it is, you know, the number was gonna be and
Keith: then doing all the math in VCA necessary to do
Keith: that was was one problem.
Keith: The other problem was that the markets themselves changed and
Keith: you know, even within the last two years, you know,
Keith: you've seen stocks like Nvidia and Tesla and Costco, Walmart
Keith: and some of the names you hear me talk about
Keith: on television a lot, these stocks have gone absolutely bananas.
Keith: And so that made, you know, the nature of picking
Keith: stocks very, very complicated because we, you know, we don't
Keith: just throw darts on the wall and say, hey, I
Keith: think you should buy this. I mean there's a lot
Keith: of quantitative stuff that goes on under the hood before
Keith: you hear me talk about a stock, whether it's, you know,
Keith: here on television or in one bar ahead. I have
Keith: to know with absolute certainty that I've got the confidence
Keith: in that stock to recommend it because I buy those
Keith: stocks too. I mean, I, you know, if I'm talking
Keith: about it, I like to eat my own cooking. A
Keith: lot of people don't, but I do, and you see
Keith: those disclosures.
Keith: Every single time I'm on television, I own it. My
Keith: family owns it. My company recommends it. no investment banking,
Keith: you know, I am very transparent about this. So...
Suze: And therefore Suze owns them too.
Keith: Exactly. Well, this is the thing. I mean this is
Keith: why we're pals, right? But the thing about that, right, is,
Keith: is now you have when we started you had maybe 30-40%
Keith: of the market that was computerized, but the rise of
Keith: passive investing, the blend of options, Wall Street's go fast crowd,
Keith: now you have 80% to 85% of the market on
Keith: any given day,
Keith: that is moving by computer with no humans involved, no
Keith: regard for the fundamentals, no regard for the selection process.
Keith: So it makes that problem a little complicated. And then
Keith: that third thing, that little, you know, that little thing
Keith: called the cloud, uh, you know, people have heard of that,
Keith: but the architecture of the cloud keeps changing. So every
Keith: time we'd engineer something, you'd get right up to the
Keith: starting line, you know, Amazon, which we intend to use,
Keith: would change the way the cloud works and so we
Keith: had to reprogram everything. So, so long story short.
Keith: We're very close. We're rejiggering, but it's gonna be ready
Keith: when it's ready. We are also pursuing an ETF because
Keith: that's something that any investor can use. It can be point,
Keith: click buy. You don't have to worry about a dang
Keith: thing except maybe VCAing into the ETF itself, so it
Keith: becomes dramatically simplified. We take care of all that other
Keith: stuff behind the scenes and you don't have to lift
Keith: the figure.
Suze: And personally, that's my vote.
Keith: Well,
Keith: me too,
Suze: but here's what's interesting and tell them the truth. Over
Suze: a year ago, yeah, maybe a year and a half ago,
Suze: I said, can't we just do an ETF?
Keith: Oh, you did. Yes, you did, and I got Suze schooled
Keith: on that. Yes, I did.
Suze: And no, it's like, no, if we do an ETF,
Suze: they're gonna, everybody's gonna find out about the secret sauce
Suze: and I don't want everybody to know what we're doing
Suze: because all because what happens with Keith's work a lot,
Suze: everybody is everybody rips it off because they know that
Suze: it's so good all these years of his experience and
Suze: the money he's invested in the computer systems, all of
Suze: a sudden you see it somewhere and they're taking credit
Suze: for it.
Suze: And then all of a sudden it makes it that
Suze: it's not, it's just not good. With an ETF it
Suze: was possible that they could go in and re-engineer what
Suze: Keith had done and bring it out in another ETF
Suze: and that's why Keith
Suze: didn't want to do it. Now he thinks that he
Suze: can protect it. Is that correct?
Keith: That
Keith: is absolutely correct. And not only that, but the, the
Keith: group that we're working with has just within the last
Keith: week signed all the documents promising to protect it. So
Keith: it's a very different playing field now.
Suze: So if it's true, everybody, and he can do that,
Suze: trust me, you are far better off rather than getting
Suze: an email every month, you figuring out what you should
Suze: do and you doing it every month, even though that's
Suze: how you would learn about investing. It would be far
Suze: better off for you in the long run.
Suze: To simply be able to VCA into the ETF and
Suze: there you go on with your life. So I hope
Suze: you understand that we haven't meant to, you know, go, no,
Suze: don't invest. That's why I did a podcast quite a
Suze: few months ago saying don't wait, you are to continue
Suze: to invest right now, continue to do these things we've
Suze: talked about, but that's the direction.
Suze: That Keith is going and I always wanted him to
Suze: go because I know from the bottom of my heart
Suze: it will be the easiest and most profitable thing for
Suze: you to do because you don't have to worry about it.
Suze: You're on vacation. You don't get the email. You don't
Suze: do it. And given the emails that I've gotten about
Suze: value cost averaging and how do you do it if
Suze: you have a whole lot of stocks and I only
Suze: want 4% of my port, no.
Suze: Just, you can do what you want with your stocks,
Suze: but there should be a sum of your money that
Suze: could be under the ETF doing it for you. What
Suze: do you think, Keith?
Keith: Well, yes, and there's one other big benefit to that too, Suze, and, and,
Keith: and it's this, is if you have an ETF suddenly
Keith: your financial professionals, if you have one or your planners
Keith: that you work with can work on integrating it into
Keith: your financial plan.
Keith: So, so it, it adds to the flexibility in terms
Keith: of how you can use it and it also makes
Keith: it suitable for somebody who's just starting out and has
Keith: just a little bit of money to invest, but it
Keith: also opens it up to very, very sophisticated, very, very
Keith: large investors again, all at the touch of a button, so.
Keith: As frustrated as I am personally about uh the complexity
Keith: of where we started and where we are now, I
Keith: think that this is gonna be a very viable, very
Keith: good solution, and we're hoping to get it across the
Keith: finish line very, very quickly.
Suze: So I hope all of you enjoyed this podcast with
Suze: the maestro. Before we go, anything else you wanna say?
Keith: Just thank you to everybody thank you to you, Suze,
Keith: for having me on. What an honor. I mean, just, I,
Keith: as I say, I've been looking forward to this all
Keith: week and it has met and exceeded every single one
Keith: of my expectations. What a privilege to be on with
Keith: you today and to have everybody out there putting your
Keith: faith and your trust in what I have to say.
Keith: Thank you for your time.
Suze: Thank you, Keith. I love you so much. I can't
Suze: even stand it. I hope you had a good Valentine's
Suze: Day too.
Keith: We did and right back at you. Love you, Suze.
Suze: All right, everybody, so there's only one thing that we both
Suze: want you to remember when it comes to your money,
Suze: and it's people first, then money, then things. I hope
Suze: you enjoy today. I hope you all stay safe and
Suze: know that together we will rise. We are strong.